W-4 Form

When you first get a job, you're asked to fill out a lot of paperwork. Your entire first day might be spent signing forms: tax forms, retirement account set-ups, promises not to sexually harass...hours spent working your way through a stack of papers.

Among these will be your W-4. It defines how much money your employer will withhold from each of your paychecks in order to pay taxes. It asks you a number of questions (if you are married, how many dependents you have, etc.). This info boils down to a certain withholding number. Based on the results, the company will send more or less cash to the government on your behalf.

Then, at tax time, you'll get a W-2, outlining how much you made and how much you paid in taxes. This becomes the basis for your tax returns. If your W-4 info led to you withholding too much, you'll get a refund at tax time. Withhold too little, you'll have to pay the difference once you file your taxes.